Madani Economy: The salient points

Prime Minister Anwar Ibrahim has laid out his economic vision today with the launch of "Ekonomi Madani".

The salient points are as follows:

The broad goals

1. Top 30 biggest economies in the world. In terms of nominal gross domestic products, Malaysia currently ranks 35.

2. Top 12 in IMD World Competitive Index. The current rank is 27.

3. Income from labour at 45 percent of total income. The present 12th Malaysia Plan goal is 40 percent by 2025.

4. A 60 percent female participation in the workforce, up from 55.1 percent in 2021.

5. Top 25 in the UN Human Development Index. Current rank is 62.

6. Top 25 in the TI Corruption Perception Index. Current rank is 61.

7. Keeping the fiscal deficit within three percent of GDP. The deficit for this year is projected to be five percent.

Top FDI destination

A key component of Madani Economy is upgrading Malaysia's industrial sector, which now stands at 25 percent of GDP, to turn it into the country's main engine for growth.

Among the strategies are diplomacy, reviewing incentives and improving infrastructure.

As a start, RM100 million will be allocated to improve infrastructure in industrial zones, especially for facilities which have a "green" concept.

Providing a conducive start-up ecosystem is also a key priority.

More details are expected when the government launches the National Industrial Master Plan 2030 next month.

Equity market

Madani Economy wants to benefit retail investors as well as fund small and medium industries to take advantage of new growth opportunities.

Later this year, the government will reduce lot sizes and allow fractional share investing.

The Securities Commission will also facilitate the automatic transition of listings on the ACE market to the Bursa Malaysia main board.

Meaningful wage

Madani Economy aims for 45 percent of GDP to consist of wages, up from 32.4 percent in 2022, in line with norms in developed countries.

To achieve this, the government will review the minimum wage and introduce a progressive wage model that links income with productivity.

The government also aims to introduce a tiered foreign worker levy. The proceeds will be used for automation programs and training locals.

Housing

The government will introduce a housing loan scheme that will allow 120 percent borrowings of up to RM300,000.

The Klang Valley will also be a focus of a campaign to improve liveability because the government wants envisions this area as a regional hub for big corporations.

Handouts

The government plans to hand out RM100 in e-wallet credits to all adult Malaysians with an annual income of RM100,000 and below. Some 10 million people are expected to benefit.

Civil servants of Grade 56 and below will get an RM300 bonus. Military veterans and pensioners will receive RM200. This small bonus was awarded in lieu of the government's ongoing review of the civil service wage scheme.

Anwar said the government could afford the handouts because of government efficiency in revenue collections and thus there are more funds than expected when Budget 2023 was tabled.

Tax breaks

To promote the Iskandar Malaysia area, Putrajaya will offer special tax rates of 15 percent for knowledge workers.

Putrajaya will introduce a performance-based tax incentive for industries to encourage high-impact activities.

Putrajaya also wants to encourage social enterprises. Special incentives and tax treatments will be offered. No details so far.

Welfare

To increase female workforce participation, the government wants to set up affordable childcare and better regulations for the childcare industry.

Employee Provident Fund and Social Security Organisation coverage will be expanded to more workers in phases.

The Rahmah programmes kickstarted by the late Salahuddin Ayub with the goal of relieving the burden of increasing the cost of living will be continued.

Equability of opportunity

The prime minister wants to treat Malaysians of all ethnicities, religions, and backgrounds fairly while noting that the majority of the poor are Malays and bumiputera.

Scholarships and boarding school placements will prioritise low-income groups.

"I hold to the principle that only through quality education can the rakyat move out of poverty," said Anwar.

Education

The Madani Economy will eventually shift the government's "supply-driven" approach to a "demand-driven" one whereby educational institutes will have to work closely with industry and employers to design their curriculum.

The government, through Socso, will also be setting up an upskilling program for the informal workers sector.

Institutional reforms

The government will set up a new unit called GovTech Malaysia to improve the government's digitalisation efforts.

Anwar also reiterated that the government will be plugging subsidy leakages in order to address the nation's fiscal problems.

He noted that the tax revenue has shrunk to 12 percent of GDP and is among the lowest in the region. - Mkini